Decoding the Market Matrix

Context, Chaos, and Why Your Stock-Picking Skills Don't Matter (Yet).

THE HIERARCHY OF SELECTION

1. MARKET TO CHOOSE

US, Sri Lanka, Pakistan, Bangladesh?

2. SECURITY TYPE

Equities, Bonds, Options, CDS, Volatility Instruments...?

3. INSTRUMENT

Specific Tickers or Contracts

If you start at #3, you're just gambling with extra steps.

1. The Hierarchy: Stop Sniffing Individual Stocks

Most retail traders approach the market like a hungry toddler in a candy store: they just grab the first shiny thing they see (usually Nvidia). Real pros follow a hierarchy. If you get the market wrong, the best stock in the world won't save you.

The 'Don't Be a Loser' Flowchart:

Select the Market: Is the US vacuuming up all the global liquidity? Are emerging markets like Sri Lanka or Pakistan finally getting their act together after a political circus?
Select the Instrument Type: Bonds, Equities, Options, Futures, Credit Default Swaps, or VIX? Pick your weapon based on your thesis.
Select the Instrument: Now (and only now) do you pick the specific ticker. It should be screamingly obvious by this point.

The Bangladesh Bond Play: A few months ago, treasury rates in Bangladesh were chilling above 12%. If you knew those yields had to fall (which usually pumps stock caps), you didn't need to be a genius to profit. You just had to choose between the safety of debt or the spicy gains of equities.

2. The Central Bank Bazooka

The Fed is basically a guy with a hammer. When inflation looks like a nail, everything gets smashed.

The Post-COVID Money Fountain: In April 2020, the Fed pulled out the 'Bazooka Gun' and printed enough money to make a Bond villain blush. Demand spiked, supply stayed the same, and US equities went to the moon. Physics!
The 2022 Tech Wreck: When the Fed hiked rates, tech companies (which live on future earnings promises) got steamrolled. But even in the carnage, value was hiding. Meta (Facebook) dropped to $80 despite having billions of users. If you noticed the user count was still robust, you rode that rocket back to $700.

3. Politics & Geopolitical Whiplash

Fundamentals are great until a billionaire pisses off a government. Just ask Jack Ma.

The Alibaba Oof

Around 2021, Jack Ma talked some smack, and the Chinese government decided to 're-educate' the entire tech sector. Even Charlie Munger got caught in that blender. Valuation didn't matter; the political climate was toxic waste.

The Rare Earths Cheat Code

When the US government started handing out cheap loans (lowering the WACC) for domestic rare earth metals miners and refiners, it was a neon sign to buy. MP Materials became the obvious play.

4. Mechanical Issues in The Markets & How It Affects You

Sometimes the tail wags the dog. In the Indian derivatives market, the volume is often 400x the spot market. That's a lot of tail.

The Jane Street Strat: Huge players can manipulate indices (like Bank Nifty) by dumping the actual stocks (the spot) to hammer prices down. This makes call options dirt cheap. They buy the calls, buy the stocks back up, and laugh all the way to the bank.

GameStop (GME): In 2020, the short volume was 140% of the float. That's like trying to fit 140 people into a 100-person lifeboat. A short squeeze wasn't just likely; it was a mathematical certainty. AMC followed the same hype train.

CFD Warning: If you trade CFDs, your broker is literally the house in a casino. They hedge their risk on the spot market during big news, which is why your execution might lag by a split second right when you need it most.

5. Risk, Panic, and the SVB Disaster

Silicon Valley Bank (SVB) failed because of a 'duration mismatch.' They had long-term bonds but short-term deposit needs. It’s like buying a 30-year mortgage with money you borrowed from your friend for 5 minutes.

The 'Too Big To Fail' Arbitrage: When Peter Thiel’s group sparked the panic, First Republic died. But Charles Schwab was too big to let burn. Liquidity dried up, bid-ask spreads went to $5 or $10 wide ($40 bid / $50 ask). If you had the guts to provide liquidity there, you collected insane premiums while everyone else was screaming.

A few days ago, Ashuganj Power Station's bond was trading at 20% yield. The 20% yield on the Ashuganj wasn't just credit risk; it was a liquidity fire sale from desperate sellers needing liquidity for one reason or another. In this way, we have to truly identify what the actual risks are.

6. The Carnival of Schemes

For every Bitcoin, there are a thousand 'Poopcoins.'

SPAC Frenzy

Companies with zero revenue trading at massive premiums just because they had a 'blank check' sponsor. Most died, but they sure were fun while the music was playing.

Crypto Wild West

Bitcoin, Ethereum, Solana, and Monero have at least some tech. Dogecoin, Shitcoin, and XYZSYDGHDYcoin have... memes and rug-pulls. Know the difference.